Q:

You save $15,000.00. You place one-third in a savings account earning a 4.6% APR compounded annually. You then invest one quarter of the remaining balance in a 3-year U.S. Treasury bond earning a 5.2% APR compounded annually and the rest in a stock plan. Your stock plan increases in value 3% the first year, decreases 8% in value the second year, and increases 6% in value the third year. What is the balance of the savings account by the end of the third year? $4,618.81 $2,910.63$5,722.23$3,910.02

Accepted Solution

A:
Scenario:
1. You deposited 1/3 of 15,000 or 5,000 in a savings account that earns 4.6% compounded annually.  If 5,000 is already in the savings account, there is still 10,000 left. 
2. One-fourth(1/4) of 10,000 or 2,500 is invested in 3-year US Treasury bond earning 5.2% compounded annually. If 2,500 is invested, there is still 7,500 left.
3. The 7,500 was invested in the stock market. 

For the savings account
The amount of money deposited in the savings account after three years will be
    [tex]F_2=P\left(1+r\right)^t=5,000\left(1+0.046\right)^3=5,722.23[/tex]

Therefore, the balance of the savings account after three years is $5,722.23.